[2014] FWCFB 4104

FAIR WORK COMMISSION

DECISION


Fair Work Act 2009
s.604 - Appeal of decisions

United Voice
v
Foster's Australia Limited t/a Carlton and United Breweries Limited
(C2014/4128)

VICE PRESIDENT HATCHER
DEPUTY PRESIDENT GOOLEY
COMMISSIONER LEE

SYDNEY, 2 JULY 2014

Appeal against decision [[2014] FWC 2163] of Deputy President Kovacic at Melbourne on 2 April 2014 in matter number C2014/3701.

Background

[1] United Voice has applied for permission to appeal, and appeals, against a decision issued by Deputy President Kovacic on 2 April 2014 (Decision) 1 in which he decided to issue an order under s.418 of the Fair Work Act 2009 (the Act), as well as the order itself (Order)2.

[2] The Order was made on the application of Foster’s Australia Limited t/a Carlton and United Breweries Limited (CUB). CUB operates a brewery at Abbotsford in Melbourne (Brewery). Employees at the Brewery engaged in various operational functions including brewing, packaging, logistics and distribution are covered by the Foster’s Australia Limited Abbotsford Brewery and United Voice Enterprise Agreement 2012-2015 (the Agreement). United Voice is bound by the Agreement and represents employees at the Brewery.

[3] The disputes resolution procedure in the Agreement is contained in Appendix C, and provides as follows:

[4] Appendix I of the Agreement concerns staffing levels at the Brewery. It provides:

[5] Appendix J, Manning Tables, sets out the staffing levels in the packaging area as at the time the Agreement was made (as indicated in the last sentence of Appendix I).

[6] In February 2014 CUB initiated discussions with United Voice delegates and affected employees concerning certain changes to staffing levels in the packaging area which had been foreshadowed some considerable time earlier. On 27 March 2014 the relevant CUB manager, Mr Marko Lukic, informed a United Voice delegate, Mr Scott Henderson, that CUB wanted to commence a work trial of the mooted changes on 31 March 2014. There were subsequently on that day two paid meetings of United Voice members, at which resolutions were passed foreshadowing various types of action, some or all of which might have constituted industrial action. This caused CUB to notify a dispute to this Commission pursuant to s.739 of the Act. A conference between the parties conducted on 28 March 2014 under the Commission’s auspices resulted in an agreement in which, among other things, United Voice confirmed that it would not encourage the taking of unprotected industrial action, and that there would be weekly meetings between the parties and reports back to the Commission.

[7] On 31 March 2014 at 6:15 am there was a meeting to discuss the work trial, which CUB desired to commence at 7:00 am. At the meeting, Mr Henderson informed Mr Lukic that there was a dispute concerning the work trial and that accordingly the status quo was to prevail consistent with Appendix C of the Agreement. The relevant employees in the packaging area then refused to participate in the work trial on this basis, and it did not proceed on that day.

[8] Later that day, CUB made an application to this Commission for an order under s.418 of the Act. It contended at the hearing of the application, which occurred late on 31 March 2014, that the refusal of relevant employees to participate in the work trial constituted industrial action within the meaning of that expression in s.19 of the Act which was likely to continue, and accordingly that the Commission was required under s.418(1) to make an order that such industrial action stop and not continue. United Voice denied that any industrial action was occurring, contending that the refusal of employees to participate in the work trial was consistent with the “status quo” provision of the disputes settlement procedure in clause (ix) of Process (a) of Appendix C of the Agreement, and thus was action authorised or agreed to by CUB. The Deputy President reserved his decision and, as earlier stated, issued the Decision and Order on 2 April 2014.

Decision and Order

[9] In the Decision, the Deputy President initially considered the question of whether industrial action was happening, threatened, impending or probable. The key conclusions in the Decision in this respect, as relevant to the issues agitated in this appeal, were as follows:

[10] After considering the issue of whether the industrial action was being organised by United Voice, the Deputy President stated the following overall conclusion:

[11] The Order made by the Deputy President was in the following terms:

Submissions

[12] The notice of appeal filed by United Voice contained five grounds of appeal. In its written appeal submissions, United Voice characterised its appeal as involving the following three issues:

(1) Whether the Deputy President erred in concluding that industrial action was happening and likely to continue.

(2) Whether the Deputy President erred in making an order against United Voice.

(3) Whether the Deputy President erred in ordering that the Order operate for a period of six months.

[13] At the hearing of the appeal, United Voice indicated that it did not press that part of its appeal which was concerned with the second issue identified above. Accordingly our consideration will be confined to the first and third of the identified issues.

[14] In relation to the first issue, United Voice submitted that any conduct by employees that was authorised by the terms of an enterprise agreement was “action by employees that is authorised or agreed to by the employer of the employees” for the purposes of s.19(2)(a), and thus did not fall within the definition of “Industrial Action” in s.19(1) of the Act. The refusal of employees to participate in the work trial was not industrial action, United Voice submitted, because once the trial had been placed into dispute, the “status quo” provision in clause (ix) of Process (a) of Appendix C of the Agreement required that the work trial not proceed. The effect of a “status quo” provision in the disputes resolution procedure of an enterprise agreement was to preserve the state of affairs in existence at the time the dispute was initiated pending the completion of the procedure, even if the employer otherwise had an unfettered right or discretion under the terms of the enterprise agreement to do what it wanted to do. In support of that proposition, United Voice referred us to the Federal Court decision (Tracey J) in Construction, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Thiess Pty Ltd. 3 Therefore, it was submitted, any right which CUB had under Appendix I of the Agreement to conduct a work trial was qualified by the status quo provision in Appendix C. The Deputy President erred in finding that industrial action was occurring and likely to continue, and consequently acted beyond jurisdiction in making the Order.

[15] In relation to the third issue, United Voice submitted that, assuming there was jurisdiction to make an order under s.418 at all, there was no proper basis to make an order with a term of six months. It was not in dispute that the work trial in question would only run for a period of a week. To the extent that the Deputy President was required by the Act to make an order with respect to industrial action constituted by non-participation in the work trial, the term of the Order should have been established by reference only to what was necessary to stop that industrial action. The six month term bore no relation to the requirement to stop the industrial action found to be occurring, and was erroneously based on extraneous considerations.

[16] United Voice submitted that permission to appeal should be granted because the appeal raised issues of ongoing importance to the parties concerning the interpretation of the Agreement, the Decision reduced the rights of employees under Appendix C of the Agreement, the making of a s.418 order was a serious matter for the affected employees given that the Act provided for pecuniary penalties for breach of any such order, and the Decision related to the correct interpretation and application of s.19.

[17] CUB submitted that the Decision was not attended by error and therefore permission to appeal should be refused. As to the first issue, CUB submitted that the evidence before the Deputy President had demonstrated that the conduct of work trials pursuant to Appendix I was part of “business as usual”, and therefore formed part of the status quo. There was no dispute that non-participation in the trial fell within the statutory definition of industrial action in s.19(1), so that the only question was whether the exception in s.19(2)(a) applied. Appendix I provided for a specific process for the orderly consideration of changes to staffing levels in which CUB had a right to implement work trials on a basis that did not prejudice employees’ rights to invoke the disputes resolution procedure and the status quo before any final change was implemented. Further, CUB submitted, the effect of that part of Appendix I which provided “The Union will not unreasonably withhold their consent to changes in manning numbers …” was that United Voice had the right to withhold its consent to any final changes, with the reasonableness of its position then having to be tested in arbitration proceedings in the Commission before the change could be implemented. In that context, the work trial was intended under the Agreement to proceed so that the reasonableness of any refusal of consent to the proposed change could properly be assessed. The operation of a “status quo” provision in the disputes resolution procedure of an enterprise agreement depended upon the text of that agreement and the particular circumstances in question. In this connection CUB referred to a number of decisions, most notably Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Ardmona Foods Ltd 4 in which status quo-type provisions had not been construed to prevent the implementation of change.

[18] In relation to the third issue, CUB submitted that the Deputy President had a broad discretion, and United Voice had not demonstrated any appellable error in the exercise of that discretion. The Deputy President found that industrial action was likely to continue until United Voice’s pay and conditions issues were resolved, and there was no evidence that these issues would be resolved any time soon. Further, CUB had further change proposals in the pipeline that might involve work trials, and the resolutions of 27 March 2014 reflected an intention of United Voice and its members not to co-operate with those proposals.

Consideration

Whether the work trial ban constituted industrial action

[19] The primary issue raised by United Voice in its appeal concerned the question of whether the refusal of employees to participate in the work trial constituted industrial action in relation to which an order could be made under s.418 of the Act. Section 418 provides:

[20] It is clear that a finding that industrial action is happening, or is threatened, impending or probable, or is being organised, is necessary in order for the Commission to be able to make an order under s.418(1). The relevant finding by the Deputy President was that industrial action constituted by the refusal of employees to participate in the work trial on 31 March 2014 constituted industrial action that was occurring and “likely to continue”, which can be taken as meaning for the purpose of s.418(1) that it was “happening” and “probable”. It is not clear whether the Deputy President clearly found that industrial action was being organised by United Voice, although it is apparent that the Deputy President’s consideration of this issue involved the same industrial action, that is, the non-participation in the work trial.

[21] In Maritime Union of Australia v Patrick Stevedores Holdings Pty Limited 5 a Full Bench characterised the evaluative assessment involved in determining whether any of the jurisdictional prerequisites for the making of an order are satisfied as being discretionary in the sense discussed in Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission.6 That evaluative assessment would include determining whether any action being taken by employees fell within the definition of “industrial action” in s.19 of the Act. Any error in a determination of that nature, would, we consider, constitute an error with respect to a mixed question of fact and law and perhaps an error of principle capable of correction in an appeal under s.604. It was not in issue and is clear that if the Deputy President was wrong in characterising the non-participation in the work trial as industrial action, then (subject to the grant of permission to appeal) the Order would have to be quashed as being beyond power.

[22] The definition of “industrial action” in s.19 of the Act is as follows:

[23] The Deputy President found that the non-participation in the work trial fell within s.19(1)(a) - that is, it involved “the adoption of a practice in relation to work by an employee, the result of which is a restriction or limitation on, or a delay in, the performance of the work”. United Voice did not challenge this conclusion in this appeal. Rather, as earlier stated, it contended that this action fell within the exclusionary provision in s.19(2)(a) in that it was authorised or agreed to by the employer.

[24] We accept United Voice’s general submission that conduct which is authorised by the terms of an enterprise agreement constitutes action that is authorised or agreed to by the employer for the purpose of s.19(2)(a). We did not understand CUB to have contested that submission. Under the Act, an enterprise agreement consists of terms and conditions of employment for employees which the employer to whom the agreement applies has agreed should apply while the agreement remains in effect. The Act gives legal effect to the terms of an enterprise agreement by providing, in s.50, that a person to whom the agreement applies must not contravene a term of the agreement. Section 50 is a civil penalty provision. Therefore, by entering into an enterprise agreement that is subsequently approved under the Act, an employer agrees to be bound by the terms of the agreement on pain of civil penalties. 7

[25] We note that, for the purposes of the appeal, it was not contested that the disputes resolution procedure in Appendix C had been activated by employees/United Voice such as to make applicable the parties’ obligations under Appendix C. The question to be determined therefore is whether the status quo provision in Appendix C of the Agreement authorised non-participation in the work trial that was due to commence on 31 March 2014. The resolution of this question requires Appendix C to properly be construed in the context of the Agreement as a whole and having regard to the industrial purpose of the Agreement. 8

[26] The decisions cited by the parties in this appeal demonstrate that status quo-type provisions in industrial agreements have been treated by courts as operating in different ways. In CEPU v Thiess Pty Ltd 9, relied upon by United Voice, the disputes resolution procedure in clause 15 of the agreement in question provided that “...while the steps below are being followed normal work shall continue and the status quo shall remain (as it was prior to the matter in dispute), unless an employee has a reasonable concern about an imminent risk to his or her health and safety”.10 Clause 15 of the agreement further provided, in relation to the disputes resolution procedure as a whole, that “...it is a fundamental requirement that it be observed in its entirety”.11 The facts of the matter were that the employer desired to alter rostering arrangements in a way which it was entitled to do under the terms of the agreement.12 The relevant union invoked the disputes resolution procedure. The Court held that in doing so, the effect of the status quo provision was to prevent the employer from implementing the altered rostering arrangements. The Court said:

[27] As earlier stated, one of the decisions referred to by CUB was AFMEPKIU v Ardmona Foods Ltd. 13 In that matter, the agreement under consideration contained a grievance and disputes resolution procedure (clause 7.3) which provided that “In order to allow for the peaceful resolution of grievances the parties will continue with normal operations while this process is being followed and the status quo as existed immediately before the dispute will remain while the dispute is being resolved”.14 The award which applied to the employer and employee in question entitled the employer to transfer any employee to a different shift on 48 hours notice. The question to be determined was whether a direction to a particular employee to change shifts was stayed by the operation of the status quo provision once the direction had been put into dispute. The Court determined that it was not:

[28] It is not easy to reconcile these two decisions. In the first, a status quo provision was construed as preventing the employer from implementing a workplace change which it was otherwise entitled to implement under the agreement in question until the disputes resolution procedure steps had been completed. In the second, the existence of an award entitlement to make the workplace change in question was characterised as a “normal incident of employment” (and therefore, presumably, part of the status quo), with the result that the status quo provision was determined not to stay the implementation of the change. We note that attention of the Court in Thiess does not appear to have been drawn to the earlier decision of Ardmona.

[29] We are inclined to the view that the “status quo” provision in Appendix C, applying the ordinary meaning of the expression, would, read in isolation, operate to stay the implementation of any workplace change that is put into dispute before it is implemented pending the completion of the various steps set out in Process (a) of Appendix C to resolve disputes. We note that clause (vi) of Process (a) provides that the process “should” be completed within five working days, so the result of this approach could not be regarded as so oppressive to the employer as not to have been intended.

[30] However in the case of issues concerning staffing levels, we consider that it is necessary to read Appendix C in the context of the specific provisions of Appendix I. As earlier stated, CUB submitted that Appendix I confers a right upon United Voice that does not exist in relation to disputes about any other issue, namely the right to not unreasonably withhold consent to ongoing changes in staffing numbers connected with changes in technology or operational requirements. Where such consent is withheld, CUB submitted, it is necessary for CUB to utilise the disputes resolution procedure in Appendix C to approach this Commission for an arbitrated determination that United Voice’s withholding of consent was unreasonable before it can change staffing levels on an ongoing basis. The effect of that submission is that, absent a contrary determination by this Commission, United Voice has a right to permanently stay on reasonable grounds changes to staffing levels arising from changes to technology or operational requirements. United Voice did not contest the correctness of this submission. We accept that submission as properly reflecting the text and the apparent intention of Appendix I.

[31] A concomitant of the special right conferred on United Voice by Appendix I is the facility to conduct work trials. Work trials must be conducted prior to the implementation of any ongoing staffing level changes (unless agreed otherwise by operators in the relevant work area). A prerequisite for the conduct of any work trial is that there must be discussions about the manner in which it is to be conducted in the relevant work area and with union representatives. There is nothing in the text of Appendix I which indicates that United Voice’s right to reasonably withhold consent to staffing level changes applies to the conduct of a work trial. The existence of the work trial facility evidences an intention of the parties that proposed staffing level changes be put in place and tested for a short period in order to enable conclusions to be reached about whether they should be implemented on an ongoing basis. It thus gives United Voice a proper basis upon which to decide whether or not to withhold consent to any staffing level changes on an ongoing basis, and, if such consent is withheld, allows an informed assessment to be made as to whether such consent has been unreasonably withheld.

[32] The rights conferred by Appendix I are distinct from the general dispute provisions in Appendix C. The right conferred on United Voice by Appendix I to permanently withhold consent to staffing level changes on reasonable grounds is a different and, at least from its perspective, superior right to the temporary status quo provision in Appendix C. However, as earlier stated, the work trial facility is a concomitant of that right. We consider that Appendix I constitutes a special scheme of provisions concerning staffing level changes which are inconsistent with the general disputes resolutions provisions of Appendix C. In that context, we consider that we should construe the Agreement in a manner analogous to the principle of statutory interpretation stated in Anthony Hordern and Sons Ltd v The Amalgamated Clothing and Allied Trades Union of Australia 15:

[33] Our conclusion therefore is that the specific provisions of Appendix I exclude the operation of inconsistent general provisions in Appendix C, and therefore that the status quo provision in Appendix C does not operate with respect to work trials properly conducted under Appendix I. Appendix I requires work trials to be conducted provided that the prerequisite consultations have occurred (unless employees agree that a trial is not required). The status quo provision in Appendix C does not therefore authorise non-participation in any work trial which meets the requirements of Appendix I. There was no issue in this appeal that the work trial that was to commence on 31 March 2014 met those requirements. The non-participation of employees in that work trial did not fall within the exclusionary provision of s.19(2)(a), and was therefore “industrial action” under s. 19(1)(a).

[34] No error has been demonstrated in the Deputy President’s finding in the Decision that industrial action was occurring and was likely to continue.

Term of the Order

[35] Under s.418(1), once it “appears” to the Commission that industrial action is happening, or is threatened, impending or probable, or is being organised, then the Commission “must make an order that the industrial action stop, not occur or not be organised (as the case may be) for a period (the stop period) specified in the order” (underlining added). That is, once a state of satisfaction has been reached concerning any of the jurisdictional prerequisites, the making of an order under s.418(1) does not involve the exercise of a general discretion but rather the discharge of a statutory duty. In Transport Workers’ Union of New South Wales v Australian Industrial Relations Commission 16 a Full Court of the Federal Court (Gray, North and Gyles JJ) considered the nature of the exercise of power under s.496(1) of the Workplace Relations Act 1996, which was similar to the current s.418(1). The majority (Gray and North JJ) emphasised the non-discretionary nature of the power in relation to the form of the order that is required to be made:

[36] Gray and North JJ went on to consider the terms in which an order under s.496(1) could be made as follows:

[37] Transport Workers’ Union of New South Wales v Australian Industrial Relations Commission was followed in Maritime Union of Australia v Patrick Stevedores Holdings Pty Limited 17, which concerned an appeal in relation to an order made under s.418(1) of the Act. In the MUA case, a number of provisions in the s.418(1) order were determined on appeal to be beyond power because they were not necessary for, incidental to, or consequential upon an order that industrial action stop, not occur or not be organised.

[38] The provisions of a particular s.418(1) order must therefore (leaving aside any specific provisions authorised by s.418(4)) be directed to the purpose of ensuring that the relevant industrial action - that is, the industrial action which appears to the Commission to be occurring, and/or threatened, impending or probable, and/or being organised - stop, not occur and/or not be organised, as the case may be. Such an order may contain provisions that seek to achieve that purpose in direct terms, and additional terms that are necessary for, incidental to or consequential upon the exercise of power for that purpose.

[39] There is one relevant difference between s.418(1) of the Act and the former s.496(1) of the Workplace Relations Act, in that the words “for a period (the stop period) specified in the order” in the current provision were not present in the former provision. However, we do not consider that this represents the conferral of a general and unconfined discretion as to the period in which the order is to operate, since the order must still be one “that the industrial action stop, not occur or not be organised (as the case may be)”. Its terms, including the period of operation, must still be directed to that purpose. That s.418(1) was not re-drafted (compared to the former s.496(1)) in order that the approach stated by the majority in Transport Workers’ Union of New South Wales v Australian Industrial Relations Commission no longer apply is confirmed by the Explanatory Memorandum 18, which discloses no such intention and states that s.418(1) “largely replicates” s.496(1). We also note that it is evident that another alteration to the drafting of s.418(1) as compared to the former s.496(1), namely the inclusion of the words “as the case may be”, was intended to confirm and continue the approach taken by the majority in Transport Workers’ Union of New South Wales v Australian Industrial Relations Commission to the construction of the former s.496(1). The inclusion of the “stop period” reference in s.418(1) appears to be a legislative drafting device which connects with the new ancillary provision in s.418(4). Provisions of a s.418(1) order specifying its period of operation must therefore serve the purpose of the exercise of the power in the same way as other provisions of such an order.

[40] The Order has a period of operation of six months. However, there was no factual dispute that the work trial in question, non-participation in which constituted the industrial action which was the subject of the Order, was only to extend for a period of a week. We cannot, with respect, discern any rational connection between the period of the Order and the purpose for which it was required to be made. Paragraph [39] of the Decision, which we have earlier set out, discloses that the Deputy President approached the establishment of a period of operation for the Order as if it involved the exercise of a general discretion as to what was “appropriate”, and for that purpose appears to have taken into account “various changes which are to be progressed at the Brewery over the next 6-12 months”. In doing so, we consider that the Deputy President erred. The six month period of the Order was not made for the purpose of ensuring that the industrial action constituted by non-participation in the work trial stop, not occur and/or not be organised, but rather for what appears to be a merely precautionary purpose in relation to other matters.

[41] Our analysis in this respect should not be taken as suggesting that an order under s.418(1) with a lengthy period of operation can never be made. However, the findings concerning the existence, future occurrence and/or organisation of relevant industrial action must be such that the period of operation serves the purpose of ensuring that such industrial action stops, does not occur and/or is not organised. For example, if the Commission finds that the relevant industrial action is threatened, impending and probable on a continuing and long term basis, that may form the foundation upon which the order required to be made under s.418(1) is given a lengthy period of operation. But that circumstance was not present here. In the circumstances of this case, s.418(1) only required an order with a period of operation sufficient to ensure that the non-participation in the one-week work trial ceased and that the trial proceeded without disruption by industrial action.

Conclusion and orders

[42] Because we have found error with respect to the period of operation of the Order, and because the Order will according to its terms continue to have effect up until 2 October 2014, we consider that it is appropriate to grant permission to appeal. We uphold the appeal insofar as the challenge to the period of operation of the Order is concerned.

[43] It then remains for us to determine what should happen to the Order, if anything, in the light of our reasons for decision. It was not in dispute that the work trial in question was conducted and completed some time ago, and there is no suggestion that there was any non-compliance with the Order. In those circumstances we consider that the proper course is to vary the Order so that its period of operation ends on the date of this decision.

[44] We order as follows:

(1) Permission to appeal is granted.

(2) The appeal is upheld in part.

(3) The Order is varied to delete clause 7 (except its heading), and to insert in lieu thereof the following: “This order shall come into effect at 2.00 pm on 2 April 2014 and shall cease to have effect at 2.00 pm on 2 July 2014”.

140120_121417.jpeg

VICE PRESIDENT

Appearances:

Y. Bakri of counsel with S. Gome for United Voice

R. Dalton of counsel with R. Hart solicitor for Foster’s Australia Limited t/a Carlton and United Breweries Limited

Hearing details:

2014.

Melbourne:

12 June.

 1   [2014] FWC 2163

 2   PR549205

 3   [2011] FCA 1020

 4   (2006) 155 IR 211

 5   [2013] FWCFB 7736 at [5]-[12]

 6   (2000) 203 CLR 194 per Gleeson CJ, Gaudron and Hayne JJ at [19]

 7   See, by analogy, Cape Australia Holdings Pty Ltd v CFMEU (2012) 223 IR 17 at [22], where a Full Bench held that a provision in an enterprise agreement providing for arbitration of disputes constituted an agreement by the employer to arbitrate for the purposes of s.739(4) of the Act.

 8   Shop Distributive and Allied Employees’ Association v Woolworths SA Pty Ltd [2011] FCAFC 67 at [14]-[18]

 9   [2011] FCA 1020

 10   Ibid at [32]

 11   Ibid

 12   Ibid at [65]

 13   (2006) 155 IR 211

 14   Ibid at [44]

 15   (1932) 47 CLR 1 at 7

 16   (2008) 171 IR 84

 17   [2013] FWCFB 7736

 18   Paragraph 1686

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